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Rite Aid said it would overhaul its board of directors Thursday, a month after it abandoned its merger with grocery chain Albertsons.
The company said that it is separating the CEO and chairman position. Director Bruce Bodaken will become chairman and John Standley will remain CEO. Additionally, Rite Aid nominated three independent directors — Robert E. Knowling Jr., Louis P. Miramontes and Arun Nayar — to the board. Shareholders will vote on the proposed changes at next month’s meeting.
The board changes are not entirely surprising because questions were raised about Rite Aid’s structure amid opposition from investors over its planned merger with Albertsons. Critics argued the deal would have provided Albertsons’ private equity owner, Cerberus Capital Management, a vehicle to take the company public without rewarding Rite Aid shareholders.
Rite Aid announced the changes as it reported fiscal second-quarter earnings that met Wall Street’s expectations and revenue that slightly surpassed them. Rite Aid’s stock is trading up about 1 percent.
The company reported a net loss of $352.3 million, or 33 cents per share. It said it incurred $282.6 million in intangible asset impairment charges related to its pharmacy services segment. When stripping out such one-time events, the company reported a loss $7.9 million or 1 cent per share, which was in line with what analysts polled by Thomson Reuters had expected.
The drugstore chain’s revenue hit $5.42 billion, slightly above the $5.36 billion Wall Street had anticipated.
Same-store sales increased 1 percent from the same quarter last year, including a 1.6 percent increase in pharmacy sales and a 0.1 percent decrease in front-end sales.
Rite Aid’s adjusted earnings before interest, taxes, depreciation, and amortization were $148.6 million, compared with $136.9 million from the previous year.
Rite Aid reaffirmed the full-year forecast it gave last month. It expects revenues to be between $21.7 billion and $22.1 billion for fiscal year 2019, same-store sales to be flat or increase to 1 percent, adjusted EBITDA in the range of $540 million to $590 million, and capital expenditures to total about $250 million.
However, it now expects its net loss for the year to be between $440 million and $485 million, higher than the previously given $125 million and $170 million, because of impairment charges. It now anticipates its adjusted earnings to be a loss of 3 cents per share or earnings of 1 cent per share.
“While we have important work ahead of us, we also have full confidence in our strategy, our team and our company to succeed in building significant momentum for the future as we continue to work to meet the evolving needs of our customers and create value for our shareholders,” Standley said.
The Albertsons deal’s collapse came just a year after regulators thwarted Walgreens Boots Alliance‘s acquisition Rite Aid. Walgreens instead purchased 1,932 of Rite Aid’s 4,600 stores for $4.37 billion. This helped Rite Aid pay off some of its debt but left it it with a much smaller footprint than Walgreens and CVS Health.
Drugstores are facing pressure as Amazon poaches their so-called front end sales of greeting cards and household goods. The e-commerce giant now enters the prescription delivery space with its acquisition of PillPack. Both Walgreens and CVS have signaled they want to add more health services to their stores to keep customers coming in.
CVS is awaiting regulatory approval for its $69 billion acquisition of health insurer Aetna, a deal that would create a health-care powerhouse. Walgreens is partnering with a number of companies, including insurer Humana and diagnostic company Labcorp, to test different health offerings in Walgreens stores.
Shares of Rite Aid have fallen 35 percent this year to $1.28 per share. The drugstore chain has a market value of $1.37 billion. Walgreens shares are essentially flat this year and are trading at $72.96 per share. The company’s market cap is $72.41 billion. CVS’ stock is up about 8 percent this year, with shares trading at $78.43. CVS’ market value is $79.85 billion.
—CNBC’s Lauren Hirsch contributed to this report